How to Accrue an Expense

This article was co-authored by Darron Kendrick, CPA, MA. Darron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984. This article has been viewed 251,444 times. Accrued expenses are those you’ve incurred but not yet paid for, and you need to record these on your balance sheet. For example, wages that have been earned but not paid should be recorded as accrued expenses. First, you’ll need to prorate the portion of the total expense that falls into the current accounting period. For example, if the current pay period is split in half, you’d record half of the payroll this period and half next time. Then, record the accrued expense by debiting your expense account and crediting the relevant payable account. Don’t forget to reverse the entry in your next accounting period so you don't count the expense twice. Many accounting software packages have options to do this automatically. To learn the matching principle, and other tips from our Financial co-author, read on!